How Nestlé Milked the Baby Formula Market

From ToxicLeaks

Corporate history of Nestlé[edit | edit source]

Nestlé Company, with its global headquarters based in Vevey, Switzerland, is the world’s largest and most powerful food corporation. With a market capitalization of more than USD$250 billion, the 150-year-old company of today is a far cry from its first product – a milk-based infant cereal invented by founder Henri Nestlé to save the life of a child. That mission has long since been overshadowed by the company’s emphasis on emerging markets and profit at any cost, delivered through the production and sale of more than 2.000 products in 191 countries, including water, coffee, pet products and skin care.

Yet commercial baby foods and formulas remain at the core of Nestlé success, notably in Asia and Africa while China is the second-largest Nestlé market after the United States. The company, confronted with continued expansion and growth challenges in 2017, has long drawn the ire of environmental, public health and social justice activists who condemn the company’s profit over people approach, particularly in advocating for its products when they interfere with breastfeeding and maternal-child health.

Yet Nestlé has never fully weaned itself from what historically caused the greatest concerns about the infant industry titan: the benefits of its baby formulas when compared with breastfeeding, particularly in the developing world and notably in China, and the insidious practices under which they are marketed.


Call to action: the IBFAN-led boycott[edit | edit source]

Scrutiny over Nestlé’s baby formula business in developing countries dates back to the 1970s and the concern that aggressive marketing of the company’s products meant profits at the expense of young lives. Activists and investigative journalists delivered data on how infant mortality spiked in South America when mothers were discouraged from breast-feeding; how the formulas cost between 30 and 50 percent of an average minimum wage in Nigeria’s cities, and how there was no clean water for two-thirds of the people in Malawi’s capital to prepare it. The “baby killer” report by the British nonprofit War on Want argued that in most circumstances, bottled formulas are not better than breastfeeding. It detailed how Nestlé company personnel influenced health care providers, or pretended to be medical authorities themselves in order to stop women from nursing and buy their product instead.

That report galvanized activists across the world, leading to one of the most sucessful boycotts in recent history. Between 1977 and 1984, the International Baby Food Action Network (IBFAN) campaigned against Nestlé and managed to put the marketing of baby foots onto the global health agenda. The boycott was suspended after the World Health Organization drafted a set of marketing guidelines that the Swiss giant agreed to observe. The “International Code of Marketing of Breast-milk Substitutes” bans the promotion of breast mik substitues and calls on producers to provide only scientific and factual information to health workers. Faced with pressure from all sides, Nestlé agreed in 1984 to implement the recommendations and IBFAN suspended its boycott.

However, the company’s unfair practices in the Asia Pacific have pushed IBFAN to restart its protest – which continues to this day. While Nestlé maintains that it supports breastfeeding and the World Health Organization’s marketing guidelines, its corporate practices were never really resolved, as troubling reports from UNICEF Lao and others point out.


Corruption and controversy continue for Nestlé[edit | edit source]

Decades ago, USAID warned that breastmilk substitutes were costing a million lives per year. Yet Nestlé sued – and won – its case against War on Want’s damning report. At the same time, the company was required to change its marketing practices. An ongoing case in China demonstrates that Nestlé didn’t.

The company has been under investigation since 2011 for using graft to build its brand in the Chinese baby formula market – and this year, six employees were found guilty of paying bribes to medical staff to illegally access patient records and promote infant formula, thereby violating a 1995 Chinese regulation governing how baby products are marketed. The investigation also revealed that Nestlé was lacking adequate internal checks and balances to ensure discipline and control.

What’s more, Nestlé is involved in the destruction of entire communities and ecosystems, as well as labor-related human rights violations throughout its supply chain, from child slavery in Côte d'Ivoire's cocoa harvesting, to palm oil plantations in Southeast Asia. That oil is used in multiple products, including Nestlé’s best selling Kit-Kat bars. The company just opened its first new factory in 26 years in Japan, where its premium bars are market leaders, even if its unsustainable palm oil production is an environmental disaster for Indonesia and West Africa.

Nestlé was also targeted in a 2016 Amnesty International report on child labor practices in palm oil farming in Indonesia. In the U.S., Nestlé fights a greedy war over water resources as it snaps up sites – in one case, the firm was caught drawing 36 million gallons from the San Bernardino National Forest in drought-stricken California on a permit that expired in 1988. The company’s expanding footprint in bottled water now makes for a lot of the billions of tons of plastic floating in our oceans.

Nestlé’s messages may be more sophisticated than they were in the 1970s – there’s a Nestlé Nutrition Institute website to promote science now instead of home-visit “sales girls” dressed up like nurses. Yet it’s clear that maximum profits remains the goal, and that’s hardly a problem constrained to Nestlé’s food business.


Broader food industry implications[edit | edit source]

A prescient 1982 “Babies Mean Business” report warned that what began with baby food would become the corporate globalization of the future as companies created a need where one didn’t exist – egregiously, in the case of baby formula, because it is designed to do what in most cases the bodies of mother and baby already do together. “In the transformation of more traditional communities, human needs for community, meaningful work, freedom from hunger and misery, and basic liberties are subsumed by a dazzling array of purchasable ‘happiness’ that increase corporate profits,” the report said. “The infant formula controversy focuses on a very particular need and a group of especially vulnerable consumers. But it is part of a larger picture that encompasses Coca Cola, Ritz crackers, Chevrolet, and Marlboro.”

Food corporations like Nestlé must be held accountable for practices that damage public health, especially within the context of developing a sustainable future. But unless global anti-corruption bodies take up the mantle, Nestlé will continue to walk unhindered down its destructive path.